The U.S. is heading toward its warmest winter on record, a trend driven by a strengthening El Niño weather pattern that is weakening demand for natural gas and pushing prices lower, Bloomberg reports.
October was the third-warmest month on record for natural gas heating demand, and November is expected to be the warmest on record by a significant margin. Both the December-through-February peak winter period and the full November-through-March heating season are also forecast to set warmth records.
The outlook has prompted traders to take their most bearish positions on U.S. natural gas futures since the COVID-19 pandemic, with money managers holding a record number of short-only contracts and their largest net-short position since February 2020. Lower demand is also affecting producers, with shale gas companies in Appalachia, including EQT Corp. and Antero Resources Corp., projecting production curtailments despite the start of the traditional winter heating season.
For consumers and businesses, mild weather and lower natural gas prices could help ease inflationary pressures and reduce electricity costs, particularly in regions such as New England that rely heavily on natural gas for power generation. However, the U.S. market remains relatively insulated from international price pressures caused by the Iran war and disruptions to gas supplies through the Strait of Hormuz.
Limited U.S. liquefied natural gas export capacity has helped shield domestic prices from overseas supply disruptions.
